Cflmnwnfotitltjr  of  Utimatfrasttts. 


SPECIAL  REPOET 

OF  THE  1'  I 

INSURANCE  COMMISSIONER. 

« 


December ,  1871. 


Wright  &  Potter,  State  Printers,  79  Milk  Street  (cor.  Federal),  Boston. 


"W.| 

. A/\ 


INSURANCE 


DEPARTMENT. 


SPECIAL  REPORT. 


>• 

0 


vO 

D 


* 


The  Chicago  Calamity. 

Some  of  the  most  intelligent  estimates  of  loss  by  the  recent 
conflagration  at  Chicago,  reach  an  aggregate  of  not  less  than 
one  hundred  and  fifty  millions  of  dollars ;  while  others  claim  a 
loss  of  two  hundred  millions  and  more.  From  information 
gathered  upon  the  spot,  and  from  careful  investigation  of  all  the 
insurance  returns  and  numerous  other  data  thus  far  accessible , 
our  own  estimate  falls  a  little  short  of  one  hundred  and  forty 
millions,  including  merchandise  and  household  goods,  public 
and  private  buildings,  and  other  miscellaneous  property  usually 
accumulated  in  a  great  and  thriving  city.  Of  the  whole  amount, 
more  than  eighty  millions,  or  full  sixty  per  cent.,  was  insured, 
involving  to  a  greater  or  less  extent  nearly  two  hundred  and 
sixty  Insurance  Companies,  or  three-fourths  of  all  the  Insurance 
Companies  doing  business  in  the  United  States.  At  the  date  of 
this  Report  (December  8th),  more  than  sixty  of  the  Companies 
thus  affected  have  been  forced  into  absolute  failure ;  while 
nearly  as  many  more  have  been  compelled  to  adopt  measures 
for  the  immediate  restoration  of  capital  or  assets,  often  impaired 
far  beyond  the  minimum  limit  of  solvency. 

This  startling  condition  of  the  insurance  interests  of  the 
country,  aggravated  by  consequent  anxiety  and  distrust,  de¬ 
manded  the  earliest  reliable  information  relative  to  the  financial 
ability  of  all  Companies  involved  in  the  disaster.  To  meet  this 


4 


Special  Report  of  the 


demand,  the  Commissioner  promptly  required  from  every  such 
Company  doing  business  in  Massachusetts,  a  sworn  statement 
of  its  gross  present  assets  and  liabilities,  with  a  separate  state¬ 
ment  of  its  losses  at  Chicago.  Of  the  whole  number  of  Fire  and 
Marine  Companies  authorized  in  Massachusetts,  one  hundred 
and  five,  more  than  half,  were  included  in  the  list,  twenty-three 
of  them  Home  Companies.  The  total  reported  losses  of  these 
Companies  foot  up  nearly  twenty -five  millions. 

The  publication  of  the  results  has  been  purposely  delayed  till 
now,  in  order  to  give  ample  time  for  investigation,  as  no  official 
report  would  possess  much  value  unless  based  upon  the  fullest 
and  most  accurate  data.  To  the  Department  Circular  issued 
October  12th,  immediately  after  the  fire,  most  of  the  Companies 
have  now  responded,  some  of  them  having  made  a  second  return 
revised  from  later  information  ;  while  a  very  few  have  been  as 
yet  unable  to  ascertain  the  precise  extent  of  their  losses.  It  is 
more  than  probable  that  losses  already  revised  will  be  in  many 
cases  materially  reduced  by  salvages  and  subsequent  adjust¬ 
ments. 

From  the  statements  received,  the  following  tabulations  have 
been  collated,  the  losses  reported  being  in  a  few  instances  esti¬ 
mated  as  nearly  as  possible,  in  others  based  upon  partial  adjust¬ 
ments,  and  in  some  stated  at  the  full  amount  insured.  These 
results  exhibit  the  condition  of  those  Companies  only  which 
have  been  involved,  no  occasion  existing  for  any  further  enu¬ 
meration. 


Massachusetts  Companies. 


name  of  company. 

Gross  Present 

Assets. 

Gross  Present 
Liabilities,  in¬ 
cluding  Chi¬ 
cago  Loss. 

Surplus  as  re¬ 
gards  Policy¬ 
holders. 

Chicago 

Loss. 

Bay  State, 

$335,095 

$95,140 

$239,955 

$5,000 

Boylston, 

947,002 

151,266 

795,736 

13,000 

City,  .... 

420,531 

43,715 

376,816 

15,000 

Eliot,  .... 

730,553 

122,496 

608,056 

12,500 

First  National, 

173,117 

69,854 

103,262 

2,500 

Fireman’s, 

1,094,190 

196,812 

897,378 

35,000 

Franklin, 

636,556 

208,601 

427,955 

55,000 

Insurance  Commissioner. 


5 


Massachusetts  Companies — Continued. 


NAME  OF  COMPANY. 

Gross  Present 

Assets. 

Gross  Present 
Liabilities,  in¬ 
cluding  Chi¬ 
cago  Loss. 

Surplus  as  re¬ 
gards  Policy¬ 
holders. 

Chicago 

Loss. 

Howard,  .... 

$407,025 

$81,269 

$325,755 

$27,500 

Lawrence, 

294,315 

27,621 

266,695 

12,500 

Manufacturers’, 

1,439,000 

337,442 

1,101,558 

120,000 

Merchants’, 

981,683 

145,559 

836,124 

10,000 

National, 

900,000 

665,635 

234,365 

400,000 

Neptune, 

974,162 

291,989 

682,173 

60,000 

North  American, 

643,894 

100,685 

543,210 

10,000 

People’s, .... 

950,000* 

615,824 

334,176* 

300,000 

Shoe  &  Leather  Dealers’, 

488,058 

120,191 

367,867 

25,000 

Springfield  F.  &  M., 

1,402,000 

787,220 

614,780 

450,000 

Suffolk,  .... 

293,000 

85,500 

207,500 

23,500 

Tremont, 

376,912 

175,622 

201,290 

67,000 

Washington,  . 

1,046,314 

261,953 

784,361 

25,000 

Totals,  •  •  • 

$14,533,407 

$4,584,394 

$10,189,012 

$1,668,500 

*  Not  including  November  receipts,  amounting  to  about  $100,000. 


All  these  Companies  are  understood  to  be  paying  their  losses 
in  full,  some  of  them  having  instituted  prompt  measures  to 
increase  their  cash  or  guarantee  funds  where  necessary  to  pre¬ 
vent  possible  deficit.  The  heaviest  losers,  the  Manufacturers’, 
the  National,  the  People’s,  the  Springfield  Fire  and  Marine,  and 
the  Tremont,  show  percentages  of  loss  amounting  respectively 
to  8.34,  44.44, *31. 58,  32.10,  and  17.17  per  cent. ;  yet  their  in¬ 
creased  assets  still  indicate  liberal  ratios  of  surplus  as  regards 
their  policy-holders,  ranging  respectively  326.43,  35.21,  54.27, 
78.10  and  114.62  per  cent.  The  surplus  held  by  these  and  the 
remaining  Companies,  the  latter  sustaining  smaller  percentages 
of  loss,  sufficiently  guarantees  the  security  of  all  present  risks. 
This  is  still  further  apparent  in  the  aggregated  summary  of  the 
whole  twenty  Companies,  in  which  the  average  ratio  of  loss 
dwindles  to  11.49  per  cent. ;  while  the  surplus  of  assets  rises  to 
222.25  per  cent. — an  exhibit,  which,  without  invidious  intent, 
may  be  regarded  with  some  degree  of  local  pride  and  satisfac¬ 
tion. 


Special  Report  of  the 

It  is  indeed  fortunate,  that  only  three  Massachusetts  Com¬ 
panies  have  been  compelled  to  succumb  to  this,  the  greatest  of 
all  the  great  fires  of  history.  One  of  them,  the  New  England 
Mutual  Marine,  was  taking  rank  as  a  veteran  in  the  insurance 
field,  having  already  filled  an  honorable  record  of  thirty  years. 
The  other  two,  the  Hide  and  Leather  and  the  Independent,  both 
just  completing  their  fifth  year,  were  also  anticipating  a  success¬ 
ful  career.  These  Companies  go  into  liquidation  with  the  fol¬ 
lowing  exhibit : — 


Gross  Present 

Assets. 

Gross  Present 

Liabilities. 

Chicago  Losses. 

Hide  and  Leather,  .... 

$392,100 

$806,300 

$720,000 

Independent, . 

494,342 

1,495,014 

1,052,000 

New  England  Mutual  Marine, 

930,151 

1,203,272 

950,000 

Totals, . 

$1,816,593 

$3,504,586 

$2,722,000 

It  will  be  seen  that  in  each  instance  the  losses  at  Chicago 
alone  more  than  absorbed  the  entire  assets,  in  one  case,  that  of 
the  Independent,  the  loss  being  more  than  double  the  assets  of 
the  Company,  while  its  gross  liabilities  appear  to  have  been 
more  than  three  hundred  per  cent,  in  excess.  It  is  expected 
that  the  affairs  of  each  Company  will  be  speedily  settled,  so  that 
all  claimants  may  receive  their  proportion  with  the  least 
possible  delay. 

Companies  from  other  States  and  Countries. 

Among  the  Companies  from  other  States  and  countries  doing 
business  in  this  State,  the  following  suffered  losses  at  Chicago. 
The  data  herewith  submitted  were  rendered  in  their  returns  to 
this  Department,  some  of  which  have  been  revised  by  subse¬ 
quently  amended  statements  ;  while,  in  a  few  instances,  the 
losses  reported  by  others  have  been  somewhat  diminished  in 
the  processes  of  adjustment.  Many  of  these  Companies  would 
therefore  make  a  more  favorable  showing  than  at  first,  especially 
with  their  accessions  from  new  business  which  has  been  large, 
and  from  assessments  now  in  process  of  collection. 


Insurance  Commissioner , 


7 


Maine  Companies. 


NAME  OF  COMPANY. 

Gross  Present 

Assets. 

Gross  Present 
Liabilities,  in¬ 
cluding  Chic¬ 
ago  Loss. 

Surplus  as  re¬ 
gards  Policy¬ 
holders. 

Chicago  Loss. 

Eastern,  .... 

$312,236 

$98,000 

$214,236 

$7,500 

National, 

417,798 

219,629 

198,169 

36,000 

Union,  .... 

427,722 

169,017 

258,705 

5,000 

Totals, 

$1,157,756 

$486,646 

$671,100 

$48,500 

Rhode  Island  Companies. 


Merchants’, 

$357,909 

$125,792 

$232,117 

$10,000 

Narragansett,  . 

767,521 

256,320 

511,201 

20,000 

Totals, 

$1,125,430 

$382,112 

$743,318 

$30,000 

Connecticut  Companies. 


iEtna,  .... 

$6,050,000 

$4,975,000 

$1,075,000 

$3,000,000 

Hartford, 

3,052,235 

2,491,574 

560,661 

1,500,000 

Phoenix,  .... 

1,756,656 

1,390,000 

366,656 

600,000 

Totals, 

$10,858,891 

$8,856,574 

$2,002,317 

$5,100,000 

New  York  Companies. 


American  Exchange, 
Citizens’, 

Columbia, 

Commerce,  N.  Y.  City, 
Commercial,  . 
Continental,  . 
Fireman’s, 

Germania, 

Guardian, 

Home, 

International,  . 
Merchants’, 


$280,887 

$85,500 

711,417 

179,180 

468,595 

68,785 

253,865 

52,322 

317,451 

62,688 

2,847,307 

2,136,655 

366,924 

148,775 

1,181,206 

554,701 

286,984 

82,108 

4,813,561 

3,805,540 

1,466,720 

958,265 

463,864 

116,450 

$195,387 

$58,000 

532,237 

35,000 

399,810 

3,400 

201,543 

26,000 

254,763 

5,000 

710,652 

1,200,000 

218,149 

58,000 

626,505 

233,328 

204,876 

45,000 

1,008,021 

2,139,213 

508,458 

546,911 

347,414 

10,000 

8  Special  Report  of  the 


New  York  Companies — Continued. 


NAME  OF  COMPANY. 

Gross  Present 

Assets. 

Gross  Present 
Liabilities,  in¬ 
cluding  Chic¬ 
ago  Loss. 

Surplus  as  re¬ 
gards  Policy¬ 
holders. 

Chicago  Loss. 

Mercantile, 

$294,336 

$153,571 

$140,765 

$112,000 

Niagara, .  . 

1,412,024 

546,141 

865,883 

233,140 

Phoenix,  .... 

1,870,077 

836,403 

1,033,674 

350,000 

Republic, 

682,382 

394,743 

287,639 

208,140 

Tradesman’s,  . 

403,044 

128,135 

274,909 

30,000 

Totals, 

$18,120,644 

$10,309,962 

$7,810,685 

$5,293,132 

Pennsylvania 

Companies. 

Fame,  .... 

$218,348 

$35,000 

$183,348 

$5,000 

Franklin, 

3,255,169 

1,858,723 

1,396,446 

500,000 

Ins.  Co.  of  No.  America, 

3,262,308 

1,781,000 

1,481,308 

550,000 

Union  Mutual, 

256,940 

101,000 

155,940 

22,000 

Totals, 

$6,992,765 

$3,775,723 

$3,217,042 

$1,077,000 

Ohio  Companies. 

Home,  .... 

$665,479 

$442,000 

$223,479 

$300,000 

Suiiy  •  •  •  • 

334,000 

230,000 

104,000 

170,000 

Totals, . 

$999,479 

$672,000 

$327,479 

$470,000 

California  Companies. 


Fireman’s  Fund, 

$682,211 

$499,687 

$182,524 

$350,000 

Union,  .... 

1,034,288 

720,204 

314,084 

500,000 

Totals, 

$1,716,499 

$1,219,891 

$496,608 

$850,000 

Grand  Totals,  . 

$40,971,464 

$25,702,908 

$15,268,549 

$12,868,632 

In  addition  to  these  Companies,  some  of  the  following  have 
rendered  only  partial  statements  of  present  assets  and  liabilities ; 
others  none ;  but  their  published  losses  at  Chicago  are  stated 
herewith.  The  foreign  Companies  are  also  included  in  this 
connection  : — 


Insurance  Commissioner. 


9 


COMPANIES. 

Chicago  Losses. 

Alemannia,  Cleveland,  Ohio, . 

$175,000  00 

Andes,  Cincinnati,  Ohio, . 

850,000  00 

Commerce,  Albany,  N.  Y.,  .  .  •  .  .  .  •  . 

400,000  00 

Corn  Exchange,  New  York  City, . 

55,000  00 

Fireman’s  (Fire),  New  York  City, . 

15,000  00 

Hanover,  New  York  City, . 

250,000  00 

National,  New  York  City, . 

37,500  00 

Relief,  New  York  City, . 

40,000  00 

Commercial  Union,* . 

65,000  00 

Imperial,* . 

150,000  00 

Liverpool  and  London  and  Globe,* . 

3,500,000  00 

North  British  and  Mercantile,* . 

2,000,000  00 

Royal,*  .  . 

100,000  00 

Total,  .  .  .  % . 

$7,637,500  00 

*  Foreign  Companies. 


As  in  the  preceding  tabulation  of  Massachusetts  Companies, 
present  financial  ability  for  the  security  of  policy-holders  only 
is  shown  in  the  case  of  others  which  have  furnished  the  proper 
data,  such  being  deemed  sufficient  for  the  purpose  of  this  Report. 
The  thirty-three  Companies  from  other  States  which  have  thus 
responded  to  the  Department  Circular,  report  an  aggregate  loss 
of  31.41  per  cent  ,  and  a  surplus  of  59.40  per  cent,  in  excess  of 
their  liabilities.  In  all  cases  when  impaired  capital  is  restored 
to  the  requisite  standard  by  assessment,  or  when  capital  is  in¬ 
creased,  an  official  examination  will  be  made,  under  the  direc¬ 
tion  of  this  Department,  at  home  offices,  in  order  to  verify  the 
result  and  determine  the  true  condition  of  every  Company  per¬ 
mitted  to  remain  in  the  State. 

Companies  which  have  Suspended. 

In  consequence  of  their  extraordinary  losses,  resulting  in  im¬ 
pairment  or  insolvency,  the  following  Companies  which  were 
represented  in  Massachusetts  at  the  date  of  the  Chicago  fire, 
have  been  compelled  to  suspend  business.  Certificates  of 
2 


10 


Special  Hepoit  of  the 


authority  granted  to  these  Companies  or  their  agents,  to  trans¬ 
act  business  in  this  Commonwealth,  are  therefore  necessarily 
revoked. 


Name  of  Company. 

Location. 

Name  of  Company. 

Location. 

iEtna, 

New  York. 

Lamar  Fire,  . 

New  York. 

Albany  City, 

Albany. 

Manhattan,  . 

New  York. 

American,  . 

Providence. 

Market  Fire, 

New  York. 

Astor  Fire,  . 

New  York. 

Merchants’,  . 

Chicago. 

Atlantic  Fire, 

Brooklyn. 

Merchants’,  . 

Hartford. 

Atlantic  F.  &  M., 

Providence. 

North  American  Fire,  . 

New  York. 

Buffalo  City, 

Buffalo. 

North  American  Fire,  . 

Hartford. 

Buffalo  F.  &  M., . 

Buffalo. 

Norwich  Fire, 

Norwich. 

Capital  City, 

Albany. 

Pacific, .... 

San  Francisco. 

Charter  Oak, 

Hartford. 

People’s, 

San  Francisco. 

City  Fire,  . 

Hartford. 

Providence  JVashington, 

Providence. 

Connecticut  Fire, 

Hartford. 

Putnam  Fire, 

Hartford. 

Enterprise,  . 

Philadelphia 

Roger  Williams,  . 

Providence. 

Excelsior,  . 

New  York. 

Security  Fire, 

New  York. 

Fulton, 

New  York. 

Washington,. 

New  York. 

Hope,  . 

Providence. 

Western, 

Buffalo. 

Irving, 

New  York. 

Yonkers  and  New  York, 

New  York. 

The  Lorillard  of  New  York  and  the  Occidental  of  San  Fran¬ 
cisco  voluntarily  withdrew  from  the  State,  and  the  Lycoming  of 
Pennsylvania  retired  under  a  revocation  of  authority,  soon  after 
the  Chicago  fire. 

The  following  are  also  specially  named  as  not  authorized  in 
Massachusetts  ;  and  others  in  the  same  catagory  will  be  publicly 
noted  as  occasion  may  require. 

New  York  Plate  Glass  Insurance  Company. 

National  Life  Insurance  Company  of  Chicago. 

North-Eastern  Mutual  Life  Association  of  Vermont. 

This  Department  has  recently  been  forced  to  take  special  cog¬ 
nizance  of  a  growing  evil  in  connection  with  the  admission  of 


Insurance  Commissioner. 


11 


new  insurance  competitors  from  other  States.  Companies  ap¬ 
plying  or  contemplating  application  for  admission  to  the  State, 
frequently  resort  to  an  illegal  practice  which  of  itself  might 
justify  their  exclusion,  viz. :  the  appointment  of  agents  in  vari¬ 
ous  cities  and  towns  with  instructions  to  commence  business, 
even  before  their  application  has  been  filed  or  their  financial 
condition  investigated.  Several  instances  have  occurred  in 
which  Companies  thus  operating  have  proved  financially  defi¬ 
cient  and  otherwise  unworthy  of  public  confidence ;  while 
agents,  in  accepting  risks  in  their  behalf,  have  rendered  them¬ 
selves  liable  in  severe  penalties  which  may  be  at  any  time  en¬ 
forced  upon  complaint  of  parties  cognizant  of  the  facts.  Those 
who  heed  the  warning  will  act  wisely. 


Companies  Authorized  in  the  State. 


For  the  better  protection  of  those  desiring  insurance,  refer¬ 
ence  may  be  had  to  the  following  list  of  Companies,  which,  in 
addition  to  Home  Companies,  are  at  present  authorized  to  do  a 
fire  and  marine  business  in  this  Commonwealth : — 


iEtna,  .... 
Alemannia, 

American  Fire, 

American  Exchange, 

Andes,  .... 
Arctic,  .... 
Atlantic  Mutual, 

Brewers  and  Maltsters,  . 
Citizens’, 

City  Fire, 

Columbia  Fire, 

Commerce, 

Commerce  Fire, 
Commercial  Fire,  . 
Commercial  Mutual, 
Continental,  . 

Corn  Exchange, 

Delaware  Mutual  Safety, 
Equitable  Fire  and  Marine, 
Eastern,  .... 
Fairfield  County  Fire,  . 
Fame,  .... 
Fireman’s  Fund, 


New  York. 
New  York. 
New  York. 
New  York. 
New  York. 
Philadelphia. 
Providence. 
Bangor, 


South  Norwalk,  Ct. 
Philadelphia.  * 

Sau  Francisco. 


Philadelphia. 
New  York. 
Cincinnati. 
New  York. 
New  York. 
New  York, 
New  York. 
New  York. 
New  York. 
Albany. 


Cleveland,  O. 


Hartford. 


12 


Special  Report  of  the 


Fireman’s, . 

New  York. 

Franklin  Fire,  .... 

Philadelphia. 

Germania  Fire,  .... 

New  York. 

Glenn’s  Falls,  .... 

Glenn’s  Falls,  N.  Y. 

Great  Western,  .... 

New  York. 

Guardian  Fire,  .... 

New  York. 

Hanover  Fire,  .... 

New  York. 

Hartford  Fire,  .... 

Hartford. 

Hartford  Steam  Boiler  Inspection,  . 

Hartford. 

Hoffman  Fire,  .... 

New  York. 

Home, . 

New  York. 

Home, . 

Columbus,  0. 

Hope,  ...... 

New  York. 

Insurance  Company  of  North  America, 

Philadelphia. 

International, . 

New  York. 

Mercantile  Fire,  .... 

New  York. 

Mercantile  Mutual,  .... 

New  York. 

Merchants’, . 

New  York. 

Merchants’, . 

Providence. 

Narragansett, . 

Providence. 

National  Fire, . 

New  York. 

National, . 

Bangor. 

Newport  Fire  and  Marine, 

Providence. 

Niagara  Fire, . 

New  York. 

Orient, . 

New  York. 

Phoenix  Fire, . 

Brooklyn. 

Phoenix,  ...... 

Hartford. 

Relief  Fire,  .  ... 

New  York. 

Republic, . 

New  York. 

Standard  Fire,  .... 

New  York. 

Star, . 

New  York. 

St.  Nicholas,  .  . 

New  York. 

Sun, . 

Cleveland,  0. 

Tradesmen’s  Fire,  .... 

New  York. 

Union,  ...... 

San  Francisco. 

Union,  ...... 

Bangor. 

Union  Mutual,  .... 

Philadelphia. 

Watertown  Fire,  .... 

Watertown,  N.  Y. 

Westchester  Fire,  .... 

New  Rochelle,  N.  Y. 

Commercial  Union, 

London,  Eng. 

Imperial  Fire,  .... 

London,  Eng. 

Liverpool  and  London  and  Globe,  . 

Liverpool,  Eng. 

North  British  and  Mercantile,  . 

London  and  Edinburgh. 

Queen, . 

Liverpool,  Eng. 

Royal, . 

Liverpool,  Eng. 

Insurance  Commissioner. 


13 


This  list  will  be  revised  from  time  to  time  as  changes  occur, 
and  citizens  enclosing  a  stamp  for  postage  will  be  furnished  with 
the  information,  thus  enabling  them  to  escape  the  imposition  of 
worthless  and  fraudulent  insurance.  Such  publication  becomes 
necessary  because  of  the  large  amount  of  bogus  insurance  which 
is  being  illegally  effected  within  the  State  in  irresponsible  Com¬ 
panies,  or  Companies  which  have  not  passed  the  test  of  a  Mas¬ 
sachusetts  examination.  Any  information  resulting  in  the  con¬ 
viction  of  parties  implicated  in  these  fraudulent  operations,  will 
be  liberally  rewarded. 


Cooperative  Insurance. 

The  annexed  decision  of  the  Supreme  Judicial  Court  of  the 
Commonwealth,  became  accessible  too  late  for  publication  in 
the  Massachusetts  Life  Report  recently  issued.  As  a  matter  of 
public  interest  and  importance,  especially  in  the  department  of 
life  insurance,  it  may  appropriately  have  place  in  these  pages. 
The  case  in  which  the  decision  was  rendered,  was  that  of  the 
Commonwealth  v.  George  R.  Wetherbee,  an  agent  of  the  Con¬ 
necticut  Mutual  Benefit  Company  of  New  Haven.  The  Com¬ 
pany  had  twice  applied  for  admission  to  do  business  in  Massa¬ 
chusetts,  but  was  refused  because  of  its  financial  inability  to 
meet  the  requirements  of  law,  and  also  because  of  the  utter 
worthlessness  of  its  so-called  cooperative  scheme. 

While  soliciting  insurance  without  authority  and  in  defiance 
of  law,  Wetherbee  was  arrested  at  Worcester  in  the  spring  of 
1870,  and  held  for  trial  before  the  Superior  Court,  from  which, 
upon  conviction,  the  case  went  to  the  Supreme  Court  on  ex¬ 
ceptions,  the  Company  claiming  to  be  a  purely  benevolent  insti¬ 
tution,  and  not  an  Insurance  Company.  The  case  was  argued 
before  Judge  Gray,  at  the  October  term  of  the  Court,  in  the 
same  year,  Attorney-General  Allen  appearing  for  the  Common¬ 
wealth.  The  opinion  of  the  Court,  recently  filed,  is  as  follows : — 

“  A  contract  of  insurance  is  an  agreement  by  which  one  party, 
for  a  consideration  (which  is  usually  paid  in  money,  either  in  one 
sum,  or  at  different  times  during  the  continuance  of  the  risk), 
promises  to  make  certain  payment  of  money  upon  the  destruction 


14 


Special  Report  of  the 


or  injury  of  something  in  which  the  other  party  has  an  interest. 
In  fire  insurance  and  marine  insurance,  the  thing  insured  is 
property;  in  life  or  accident  insurance,  it  is  the  life  qr  health  of  a 
person.  In  either  case,  neither  the  times  and  amounts  of  payments 
by  the  assured,  nor  the  mode  of  estimating  or  securing  the  payment 
of  the  sum  to  be  paid  by  the  insurer,  affects  the  question  whether 
the  agreement  between  them  is  a  contract  of  insurance.  All  that  is 
requisite  to  constitute  such  a  contract  is  the  payment  of  the  con¬ 
sideration  by  the  one,  and  the  promise  of  the  other  to  pay  the 
amount  of  the  insurance  upon  the  happening  of  injury  to  the  subject 
by  a  contingency  contemplated  in  the  contract.  The  contract 
made  between  the  Connecticut  Mutual  Benefit  Company  and  each 
of  its  members,  by  the  certificates  of  membership  issued  according 
to  its  charter,  does  not  differ  in  any  essential  particular  of  form  or 
substance  from  an  ordinary  policy  of  mutual  life  insurance.  The 
subject  insured  is  the  life  of  the  member.  The  risk  insured  is  death 
from  any  cause  not  excepted  in  the  terms  of  the  conti*act.  The 
assured  pays  a  sum  fixed  by  the  directors,  and  not  exceeding  ten 
dollars,  at  the  inception  of  the  contract,  and  assessments  of  two 
dollars  each  annually,  and  of  one  dollar  each  upon  the  death  of 
any  member  of  the  division  to  which  he  belongs,  during  the  con¬ 
tinuance  of  the  risk.  In  the  case  of  the  death  of  the  assured  by  a 
peril  insured  against,  the  company  absolutely  promise  to  pay  to  his 
representatives,  in  sixty  days  after  receiving  satisfactory  notice  and 
proof  of  his  death,  ‘  as  many  dollars  as  there  are  members  in  ’  the 
same  division,  the  number  of  which  is  limited  to  five  thousand. 
The  payment  of  this  sum  is  subject  to  no  contingency  but  the  in¬ 
solvency  of  the  corporation.  And  the  means  of  payment  are  derived 
from  the  assessments  collected,  upon  his  death,  from  other  members ; 
from  the  money  received  upon  issuing  other  certificates  of  member¬ 
ship,  which  the  by-laws  declare  may,  after  payment  of  expenses,  be 
‘  used  to  cover  losses  caused  by  the  delinquencies  of  members,’  and 
from  the  guaranty  fund  of  one  hundred  thousand  dollars,  established 
by  the  corporation  under  its  charter. 

“  This  is  not  the  less  a  contract  of  mutual  insurance  upon  the 
life  of  the  assured,  because  the  amount  to  be  paid  by  the  corpora¬ 
tion  is  not  a  gross  sum,  but  a  sum  graduated  by  the  number  of 
members  holding  similar  contracts ;  nor  because  a  portion  of  the 
premiums  is  to  be  paid  upon  the  iTncertain  period  of  the  deaths  of 
such  members ;  nor  because,  in  case  of  non-payment  of  assessment 
of  any  member,  the  contract  provides  no  means  of  enfoi*cing  pay¬ 
ment  thereof,  but  merely  declares  the  contract  to  be  at  an  end,  and 
all  moneys  previously  paid  by  the  assured,  and  all  dividends  and 


Insurance  Commissioner. 


15 


credits  accrued  to  him,  to  be  forfeited  to  the  company.  The  fact 
offered  to  be  proved  by  the  defendant,  that  the  object  of  the  organi¬ 
zation  was  benevolent  and  not  speculative,  has  no  bearing  upon  the 
nature  and  effect  of  the  business  conducted  and  the  contracts  made 
by  the  corporation. 

“  The  ruling  that  this  association  was  an  insurance  company,  with¬ 
in  the  meaning  of  the  statute  upon  which  the  defendant  was  indicted 
was  therefore  correct,  and  his  exceptions  must  be  overruled.” 

The  decision  of  the  Court  is  in  accordance  with  the  ruling  of 
this  Department  ever  since  the  irresponsible  brood  of  cooperatives , 
so  called,  first  sought  to  practice  their  confidence  game  upon 
the  public.  With  this  and  the  statute  of  1870,  (section  5, 
chapter  349,)  such  deceptions  ought  to  pass  under  the  ban  of 
perpetual  condemnation,  as  not  one  of  them  can  bear  for  a 
moment  the  test  of  financial  scrutiny  or  common  prudence. 

JULIUS  L.  CLARKE, 

Insurance  Commissioner. 


